clinical trial showing the effectiveness as we call them, multiple companies are reimbursing for this product. by all means, talk to your insurance company and most likely they will reimburse for such. by the way, all artificial pancreas -- it is the glucose monitor speaking directly to the system through eight set of rules. that is what the artificial pancreas is. host: gene as type 1 diabetes. caller: thanks for having this discussion today. it boils down to personal responsibility. the man from kansas was absolutely correct. like himself, i have been insulin-dependent since 15, and i'm really in good shape. i am building a house, in fact, right out physical activity is something you have to do.

the man from kansas and a couple of other colors are absolutely correct. big pharma in this .. fought against any type of health care reform, has made it very expensive. the cost of insulin has increased from about $32 a vial to over $50 a vial. since the health care bill was passed in congress, it is impossible for me to believe that insulin production costs have increased over 100%, or route 100% -- or around 100%. something is going on, and i think it is called greed. i would like the commentators and addressed the issue of healthcare in this country -- if you are willing to provide it people like me with any type of

reasonable health care coverage -- they are allowed to continue their criminal behavior. guest: you mentioned that pharmaceuticals opposing health- care reform. that is not the case. we want to make sure that everybody has access to affordable health insurance. we are very much supportive of that . your comment about greed, i just don't agree with that. and a standby people have that perspective, but that is not -- i understand why people have that perspective, but that is not what our companies are about. the government needs to continue to support biotech and the pharmaceutical industry with the or types of regulatory policies and tax policies so that our companies can create products that improve the lives of people with type 1 diabetes.

as i said, i have a daughter who has it, i know how you feel, i know the cost and the toll it takes on the family indic -- family and the kid. it is the biotech industry that is doing all the work to make sure that treatments improve over the course of our lifetime. host: back to the phones. thomas on the line for democrats. caller: i want to thank everybody who works for c-span for breeding programs like this -- bring in programs like this to us. i am a diabetic and i have been talking to other diabetics, and they say i might be able to call off might insulin at night. if so, when? host: thomas, we are going to leave it there. guest: i cannot comment on any kind of medical care per se, but it is best to consult with your

health care provider. every individual has a different experience with diabetes. treatment does need to be individualized. this is a tough disease to manage. it is a big burden, whether you have the disease or you have a family member with this disease. host:

on behalf of the ws pg and our board members who are presence tonight, i want to welcome everybody here. we are so glad that you could join us for this behind the headlines event. these are events on hot issues in the news, and recently we have done it sounds on egypt, libya, women in the middle east,

and our then tonight is with ambassador husain haqqani, the pakistani ambassador to the u.s. who will be joined by our friend and frequent speaker and moderator at "washington post" senior, senior correspondent karen de young for a conversation on u.s.-pakistan relations. the event could not be more timely as we all know, given the increased tensions in the relationship between the two countries following the killing of osama bin laden. we are so pleased to have the ambassador with us tonight to explore the complexities and the importance of this relationship and extremely lucky to have karen back. i want to recognize if you guess who are here with us tonight. undersecretary of state for public diplomacy, judith mchale.

[applause] principle deputy assistant secretary for economic energy and business affairs, deborah mccarthy. [applause] members of our corporate advisory council and of course our many ambassadors and diplomatic colleagues who work very closely throughout the years on our embassy events. our next one is going to be in july at the embassy exam the end it will be on african women leaders promoting investment, trade and peace. we are hoping that many of you will be able to join us for this very special event. and now it gives me great pleasure to welcome our speaker and moderator. you have -- in your program book so i am just going to give you the highlights and a few of their accomplishments.

ambassador haqqani has represented pakistan in the united united states since 2008 and he appears regularly on television and frequently publishes op-ed pieces. he was an adviser to prime minister benazir bhutto and is a journalist, author, professor and scholar. our moderator, karen de young is associate editor and senior national security correspondent for the post and is also an author and has served in many senior positions at the post in washington and abroad. and she has covered pakistan and afghanistan extensively, so we are really lucky to have both of them tonight. after the ambassadors opening remarks, he and karen will have

a conversation before opening it up to q&a with the audience. so please join me in welcoming ambassador haqqani and karen de young. [applause] >> thank you very much patricia for that kind introduction. of course when i was asked to come here i talked and nobody is paying any attention to pakistan these days. nothing gets said about pakistan in the media so why not use this forum to be able to communicate, and of course find an excuse to be on c-span. [laughter] and so therefore, here i am. it is a pleasure to see secretary mikhail in the audience, judith mchale and i have worked together in the last, since her appointment as undersecretary and public diplomacy of course is one of

the many challenges we have dealt with on our and so it is a pleasure seeing you here in thank you for all the help and cooperation that you offer here. and to the distinguished audience many of whom i know personally for quite some time which tells you just how will play in but i would like to also recognize my very able deputy, the embassy of pakistan is very lucky to have a roman as the second-in-command. hopefully one of -- we have had two women ambassadors which is probably a better score than most countries so i'm very proud to have a very competent woman as my right hand at the embassy. let me just begin by saying that the united states and pakistan have been allies for a long time. pakistan and the united states actually signed a mutual defense agreement in 1959. we started a relationship going back to 1949 considering

pakistan got its independence in 1947. that is really since inception and then we have had a treaty relationship and pakistan joined the southeast asia organization which is part of john foster dulles' ring of treaties for containment of -- so pakistan in the u.s. have been allies for a long time but sometimes i feel that this is like a couple that has been married for a very long time and still don't know each other. [laughter] and that is why we have periodic difficulties and differences. pakistan culturally is a society which values relationships and consistency in relationships. the united states has a relatively more functional approach especially in international relations and that has been the real sore point here between the two. the americans always come and say give no buts do this together in the pakistanis

think, this is the beginning of a relationship and that is done and the american say fine. now you know we have got other things to do and the pakistanis feel this is very disturbing. this is a very disturbing trend and the americans are not really our friends and something else comes up in the american say we need to do this together. the most important thing is to understand that there is going to be an american pakistani partnership it has to be a long-term strategic partnership. and it cannot just be transaction. there are transactions in the closest of relationships. i am a father and so i know. you have transactions even with your kids. there is nothing wrong with transactions but it can't be exclusively transactional. and to understand the context of why pakistan is a newspaper sometimes describes pakistanis as both paranoid unplug and india centric. no we have a region where we

will live long after the americans security concern du jour has passed. we know that from fact. we know it from the cold war. we were the country that provided the intelligence base from which france took off for its mission over the soviet union and got shot down. only to have the soviet union threaten us with retaliation because we have a base in pakistan. without there being any american commitment actually to be there to protect us against that retaliation if that occurred. those are pieces of history. so many times those of you have had me. >> know this is my little clicée but i'm going to repeat it anyway because sometimes clichés are good and that is americans do a lot of things very well. america is a great nation which has contributed immensely to human progress, the idea of liberty and the idea freedom and the idea of democracy modern capitalism and globalization and everything and then of course

more than any other nation in at least a 200 years. there is one thing americans don't do. two things americans don't do well. one is history. the american attitude to history is you know joe, he is history. [laughter] bar or all history is bunk. that is the attitude. there was a young man who introduced himself as a history of -- and i said when i was teaching this country they rob him was finding enough kids who wanted a history major because everybody wondered what kind of job and i going to get with a history major not understanding history and the second part americans don't do well is patients. and we in our part of the world part of the history is the most important so the historic context go to our relationship and our relationship with our neighbors. and because of that, we find ourselves in a position where we have never been fully able to

trust their counterparts in the u.s. government and vice versa. now we have a situation in which we have a war that we need to fight and win for our people safe which is the war against terrorists and terrorism. terrorist that killed more pakistanis in the last several years and they have killed any citizen of any single nation. 30,000 people have died in pakistan because of terrorist actions and that includes benazir bhutto, our most popular leader. the spouse of our current president and a very dear personal friend of many of us in government including myself. and a respected leader for us. and we have -- are the only country which has military offices in the rank of general. that said we do have a complicated reality in our region and therefore that complicated reality sometimes does not always intersect positively with american policy and causes problems so the

americans wanted done yesterday and the pakistanis say let's do it quietly and patiently. americans do it that there -- airwave and the headline is pakistan-u.s. relationship breakdown again. let me say that this relationship is under stress, but it is not on the brink because both sides also realize the value of each other. the pakistanis realize how important the u.s. is to pakistan and the u.s. recognizew important pakistan is to the u.s.. if there is to be a stable afghanistan, that requires pakistan's critical participation in any reconciliation process. at the same time, the retreat of al qaeda and all terrorist groups affiliated with al qaeda requires pakistan to be able to defeat them at home for our own sake. we don't need to do it just for you but we need to do it for

ourselves. that is not easy. it is not easy simply because these people have support networks as has been said by many american officials. osama bin laden was found in pakistan. there is no evidence that anybody in the pakistani government had anything to do with his presence there but obviously he had some people in pakistan who supported him and here is my answer to that query. 180 million people in pakistan, most of them overwhelmingly muslim. a lot of them shared views and ideologies and belief systems that made them sympathetic to radical groups and that is where the effort of trying to change the discourse of pakistan changing the environment, the economy, the educational system has been very important and that can happen in a transactional way. the restoration of as -- islamic

caliphate is the best for islam's today. those kinds of numbers 1% of the population is sympathetic to a few, a radical view for islamic revival and insurgents we are talking about 1.89 people. that is a lot of people. is not a small number and amongst them can be people who create -- who can work and provide a private safe haven of private sanctuary cleverly designed and very cleverly predicted for somebody like osama bin laden so what is important is to get over the moment and the good news here is every few days, and i have spare time, which is like three minutes a day, i actually try to find some oil and i played -- [inaudible] what i do is i e-mail journalists stories that have appeared about the u.s. pakistan relationship or something from seven years ago and i say by the

way today's headline, headline seven years ago groundhog day. it is just the movie. [laughter] and it is that kind of quality. there are certain things. pakistanis we have to go past the simplification that pakistanis simply cannot be trusted by the united states and that the united states is fickle when it comes to its relationship with pakistan. it is a difficult narrative to manage, and as i said earlier, it is an easy job and that is why i have it. but, we are working -- it's not going to be easy. it's not going to happen overnight. patience is required. the important thing is that the two countries need each other and we will continue to work at it. past the headline du jour, past the crisis du jour and passed

the strategic moment. strategic voluntary thinking. we have to go beyond that and understand pakistan is a muslim majority nation strategically located at the crossroads of south asia, central asia and the middle east and it has neighbors such as india and iran and china and afghanistan and therefore its strategic location cannot be wished away nor can the complex of these of its populace. 180 million people. there is no such thing as a pakistani -- 180 people know you people living a two -- new democracy will have a lot of democracy. the good news again is we are working on our democracy. we have sustained it for three years and hopefully we will be able to sustain it for the longer-term future and is a democracy it will be easier for the united states to work together with pakistan. we are in the process of normalizing relations with the

two neighbors we have had difficult relations with afghanistan and india and you see that it started happening. the third thing is that we are also thinking and looking at things differently instead of sitting at the crossroads of these regions. we want to see ourselves as sitting with the opportunities that these regions present us. transformation in transition is never easy. it is going to be difficult or good is going to take time but we have the clarity of our vision and the intent is there to do it. i'm going to leave all the dumb questions for karen during the dialogue. thank you all for being here. [applause] >> well you can all see husain haqqani is a very adept speaker and he has had all kinds of opportunities in all kinds of forms. he has paired with jon stewart on "the daily show."

he has been on charlie rose and has is done inoperable talk shows and is incredibly adept at not answering questions that i want him to answer. [laughter] so i'm going to try. i'm going to try. >> i was waiting for a complement. [laughter] >> that was a compliment. that was a complement. in the beginning of your remarks he talked about public diplomacy and what a challenge it was for both our countries. you were quoted recently as talking about remarks he made at pakistan's national defense university where you asked your audience who pakistan's enemy was. u.s. them how many of them thought that al qaeda was the enemy and not too many raised their hands. u.s. them whether india was the enemy and not too many raised their hands in the new estimate the united states with the enemy and there is where you got most of the hands raised. i think that is something that people in this country just find

inexplicable, just can't understand. they say my gosh we have given pakistan $20 billion over the past eight or nine years and granted that is kind of a pittance compared to what has gone into afghanistan and some other places but it is certainly more than in the past. can you just explain to us why is it that pakistanis don't like our country? >> first of all let me begin by directing the narrative on what happened at the national defense diversity in islamabad. eventually the national defense university put a video on their web site and you can see actually it wasn't sort of you know that those who taught him this was a mixed audience of civilian and military so it wasn't just the military officers there. we should be very clear about that. but those who thought al qaeda was a major threat and those without the united states was a major threat were more or less

equal in number. there were less people concerned about india so that is the correct position. it was just after the abbottabad incident in which osama bin laden was taken out, and the feeling in pakistan was that the u.s. had sort of violated pakistan's sovereignty and doing that and the u.s. could have done the same with pakistan's cooperation. and so that was the divide within pakistan reflected in that. is not just a simplistic analysis of it would be it is more nuanced. people didn't mind, even those people who didn't mind it in some of bin laden being taken now they thought the u.s. should have done it unilaterally. it was like you know i've a problem in in my backyard that you can bring the front doorbell and asked me to help you or you can jump across the wall and come into it. there were two different

reactions to those two different things. as far as why is the united states not popular in pakistan are not like? let me just say pakistan is not a well-liked in the united states either right now. and that always has to do with how perceptions are being managed or are being stated. if the news daily airs that pakistan is the source of trouble for american forces in afghanistan, that without the detail of what the context is, if we just said that you know the u.s. asked pakistan to do xyz and pakistan refuses to address the ordinary guy in mobile alabama is not really as much an expert on foreign-policy although there are those who would argue that there are that many real experts of foreign-policy inside the beltway either. but the poor guy in mobile alabama is catching the 30-second sound bite on the radio as he is driving home from

his job and he hears something negative about pakistan. that is how this perception is being created. in pakistan the reverse is happening. the news is on and the u.s. made a huge mistake several years ago when you shut down your united states information agency which was a huge public diplomacy operation, which basically was about explaining america to people. now your attitude is we give you money and now you should like it -- us but with all due respect how many of you have actually fallen for that in your private lives? ex-spouses collect alimony and they still don't like the former husband. [laughter] it is not the way the world works. so i can understand why people can understand that here is a country where the general feeling is that the americans came and asked us to help them create a massive military operation against the soviet union when the soviet union occupied afghanistan.

is called, the major operation to stop soviet march towards the south towards iran, towards pakistan and towards islam about. we created this humongous operation of jihadi groups and organizations. the golden rule is you arm people, you disarm them and it is always happen. when you have -- you take the guns back from the conscripts and give them something else to do but instead of doing that -- in charlie wilson's war you've seen the caricature that. i was there for the complex of that. i remember begging americans, congressmen and senators not to shut down the international military education and training program for pakistan. at least keep that's a lot pakistani military officers who've have exposure to the united states and they said they wouldn't be bothered because the main concern which was the soviets in afghanistan was over so the u.s. just walked away.

pakistan is said to do with the fallout. of course it wasn't managed very well and we can see that. there were leaders in pakistan and some of the military successors and many political leaders who didn't understand the complexity and basically they just thought well all we need to do is divert these guys from afghanistan to other fronts and try to use them as instruments but the real problem is the fact fact that all of a sudden having economic resources, to train them, to equip them and having a quick them there was nothing to follow. so all these guys turned on us and so we had a problem. that is one of the reasons why people decided the united states is fickle and walks away. doesn't care what the outcome is for us. the second reason is there is an overall sort of negativity towards the united states all over the muslim world. you have had a problem telling your story throughout the muslim

world. it's amazing if you watch al-jazeera arabic. i don't know how may people here do but if you watch al-jazeera arabic it is sometimes more sympathetic to israel because the israelis have an adequate speaking spokesperson on al-jazeera over time. since they have been that they are able to tell their own story in their own words but there is no arabic-speaking american spokesperson so they are up so good to hear the air version. and then you have these people, and i mean the media all of a sudden and now we have something like 38, 24/7 news channels in different languages and pakistan. guess what the united states would be like with 38 "fox news" channels and msnbc's? that is the reality you are dealing with air except you did invest in it so now the channels are really on your side. that is the reason why people don't like the united states in pakistan. you haven't told her story. you walk away from pakistan and

by and large there is this whole fallout of the perception. if you were -- secretary clinton went there and guess what? gas went up. i won't overplay this from 11% approval rating of 221% and maybe 10%. if you are a town hall meetings trying to explain your position, if it is an election year and the united states, you will make headlines out of it. you have to keep it -- and this is another problem you have. because you have painted pakistan as a hardship olds drink most american diplomats and it is not a family -- most diplomats go there for one-year postings. three months of unpacking, six months of service, three months attacking again. that is what no way to actually have an direction with a population. so your case is going unheard. sometimes i make a better case if i may say so for

u.s.-pakistan relations on pakistani television than your entire government and i am not paid half as well as most of the people in the u.s. government. [laughter] and i did answer that question with tremendous obedience. [laughter] >> you did. i think one of the concerns however, is that if as you say the pakistani government realizes it needs the united states just as the united states realizes it needs pakistan, that they believe here is that it is incumbent on pakistani leader some time to defend this relationship and that they don't see that happening. that it is not just up to the united states to say hey, like us but that pakistani leaders particularly in the military sometimes overtly acts against a better relationship and that many of the stories that are in the pakistani media which you so rightly recognized are quite anti-american.

you are on military seas to its advantage and to its own -- to portray this relationship as not good. >> the important thing is that, i mean, it leaks in the media is in an cement that is used often by people who are losing the policy argument. let's be honest. that is one way to sabotage sort of you know the momentum so if you have that situation in pakistan it is always those individuals within the government that provide, whether civilians or non-civilians, who feel that the elected leadership is moving the country in a totally different direction from where they would ideologically want it but the way to fight it would be together. so while i can see the point that maybe too much misinformation in circulation on u.s. pakistan relations in you and i both know the details of what sometimes the stories are, you know.

but conspiracy theories are a very common thing in our part of the world. it is unfortunate but let's be real. 48% of, first of all we have a very young population. half of our population is under the age of 15. 40% of those below 18 our kids that don't go to school. so these guys it is very easy for somebody to come on television and tell some unusual story that some -- sounds very plausible to them. for example we had a recent television show in which this guy was talking about some satellite-based system that america has and they have a fancy name for. basically allegedly the u.s. has the ability to maneuver and manipulate and cause fires and cause earthquakes. it is absolute nonsense with all due respect to whoever used it on television although i don't have much respect for them.

but they get away with it. so i agree with you that there are those elements who may be leaking stuff to the media for policy reasons. but if the u.s. and pakistan work together on this and the governments are clearly understanding of the thing and they say we have to work together and we have to stick it out, we will be able to work on that. it has happened in other countries. it is not like pakistan is the first country that has been affected by conspiracy theories in a significant way. southeast asia, i was there when the gun journalist -- in the situation was not really different. there were a lot of conspiracy theories in circulation. americans got the government on board and walk to the -- worked it out. my answer is that hasn't happened because it hasn't received the kind of quality attention that it should have been the consistent attention.

after 9/11, the u.s. got -- did a quick kind of shotgun marriage with the unelected regime of general musharraf. neither the government of pakistan or the american leadership at that time considered it necessary to try and create any public support for sort of changing the empire meant for a greater american presence etc.. and then, things like for example the incident where this gentleman decided to play jason bourne in real life and killed two people in broad daylight in a pakistani city didn't help. i mean the argument about do you expect the illiterate population in our villages and in our small towns to understand arguments about diplomatic immunity? it was an ugly american is shot to pakistanis without any provocation or reason, and then getting away with it.

and so, those are the things that also have to be taken into account. it is not just always our fault. there is enough blame to go around. >> i am going to give you a compliment now, which is that i think the best ambassadors in washington recognize the amount of attention they have to devote to congress. you have to know a lot of people. you have to spend a lot of time with them, sometimes even more time than you spend with people in the administration and i think that is one of the things that you have done and one of the things you have spent the most time on. what is your sense of what the feeling is in congress now? are you worried that there is going to be a real push to cut off, to circumscribe this relationship? obviously the obama administration has gone out of its way i think it is fair to say and john brennan did it again today in his speech and saying look, yes this is the competition relationship. we need each other and we are going to try really hard.

this is going to work in enlisting all of pakistan's accomplishments and counterterrorism. how concerned are you and what effect would actually have if congress stands up and starts complaining more actually to the point of imposing more restrictions on aid and threatening to cut it off? >> first of all we don't want this relationship to be just about aid so i think when people start talking about threatening to cut off aid etc. i tell them, let's back off on the state is this. is not like we are hired help and the aid is our renumeration. is something we have worked together and they be of both agree that is the way forward to try to strengthen our countries capabilities in fighting terrorism. and having the social and economic base that will enable us to deny that there are for critters, more recruits for the future. let's not just make it as you know a reward and then when there is some behavior that is

unacceptable it is withdrawn. let's not talk like that. with that said, i am concerned and i fully understand by the way the concerns. i fully understand because they have to explain to a very complicated american audiences which is not always understanding foreign policy. middle america's jobs are the economy and an institution like this, $2 billion without realizing by the way that maybe the war in afghanistan is consuming $12 million a month which is six times the annual assistance that is being spoken of in relation to pakistan. that doesn't always -- and the emotional thing is you know, if osama bin laden was in pakistan, let's cut off assistance to pakistan because that is the only -- if you have a hammer every problem is a mail.

you are in congress and you have the hammer of aid and that is what you use. the truth is that hasn't worked in the past. cutting off aid, the aid we may be able to, we would like it for the sake of being able to have that relationship but cutting off aid as a weapon of influencing policy hasn't usually worked. that said, congress will i am quite sure listen to our military leaders, listen to the frustration. because after all, as someone who admires america's founding principles, i do understand that there was a reason why the founding fathers and the american constitution led the conduct of foreign policy to be the jurisdiction essentially of the executive branch. because while the money has to be appropriate by congress the

actual conduct of foreign policy has to be done by the executive branch because they understand. they have people understand in detail for as elected officials and members of congress and make a lot of effort now in this day and age to go and try and understand their countries, their primary responsibility is essentially to their constituents. so we are in an ongoing dialogue with members of congress many of whom have been very supportive. there are some who are asking tough questions and i respect him for asking those tough questions. my wife is a member of parliament in pakistan and she answers tough questions because that is what she was voted into office for. i would like to congress to continue to answer tough questions. i am here on behalf of pakistan to answer their tough questions but i think this is not something that is going to be worked out by making those, taking those tough questions a step farther and making them

into threats. that is not what we should be doing and i think the american administration's position is the position that can bring pakistan and begin a into an equilibrium in which american goals and pakistan schools will both be fulfilled. only together, not by going at each other. >> i want to switch subjects a little bit to afghanistan. this week, you had this latest meeting of the core group of afghanistan-pakistan and the united states talk about reconciliation issues. can you talk a little bit about what pakistan's assessment is of that process, not only the core group process but reconciliation in general, reports of united states meetings with taliban officials and also what pakistan can bring to the table? pakistan has talked frequently about needing to have a seat at the table.

what do you bring to the table? the americans have said you need to either sever your relationship for example with the haqqani network or bring them into this process. what can pakistan do in order to make this process work better? >> first of all, we support a reconciliation in afghanistan because we understand that wars essentially always and through some kind of reconciliation and talks anyway. so, the reconciliation process in afghanistan has to be led at the afghans. it is their country, and to bring to an and the eternal conflict in afghanistan that started after the departure of the soviets way back in 89. the soviets -- continued to hold on and after 1992 there was the famous war that brought the taliban to power.

so we did not want in any way to intervene in the internal afghan process. it has to be an afghan-led process. we are very closely in contact with the afghan leadership. president karzai has visited pakistan recently and continuously engages with the leadership in kabul in afghanistan. and the united states afghanistan and pakistan formed a core group in which we slowly engage others. why is afghanistan being so difficult? one minute for me to play professor haqqani instead of ambassador haqqani. history, when the soviets left, a lot of regional powers all ended up adopting the different factions of the armed groups in afghanistan that had and created primarily to fight the soviet union. the americans created a vacuum. some groups were adopted by a random, some groups by the russians and subsequently the central asian states, some by

our neighbors in india and some by pakistan so you ended up having different groups, having links with different regional actors and regional powers. and so, any reconciliation in afghanistan has to be based on the concept that none of the regional powers will play a role in afghanistan in terms of trying to dictate the outcome of the reconciliation. what can pakistan do? pakistan is willing to facilitate in every way. we still have 2.5 million refugees, afghan refugees in pakistan. the afghans in pakistan said you know, we have the ethnic overlap, the pashtuns in afghanistan and pashtuns in pakistan. we want the pakistani pashtuns who have tribal -- with their counterparts understand that the pakistani pashtuns will continue to look towards islamabad. the afghan questions should look

towards -- that are pashtun elements can through links with various people within the pashtuns on both sides of the border, can be used to facilitate the reconciliation and peacemaking process in afghanistan. the u.s. has to make up its mind on what it wants to see in afghanistan and once it has made up its mind and encourage the afghan government to continue to take the lead role, we are there as facilitators. the most important thing is that all three afghans pakistanis and americans have to share all its information, be trusting of each other and nobody should try to, try to do something that creates new misgivings on the part of the others. we are partners and we have to be good partners. i think a lot more is happening here, karen and that doesn't

mean you will write a story about the assumed that there is a lot more happening quietly behind the scenes, as it should. all such processes, the quiet diplomacy that sets the stage iv the events that will be seen by the world as the beginning of the reconciliation process. i think those events are quietly taking place right now. i won't say that they are going to succeed tomorrow or the day after. when the breakthrough comes than the reconciliation moves much faster. right now we are in the preliminary stages. hopefully we will move faster when we are all on an agreed course and start trusting each other. >> i'm going to open the floor to questions now, and if you could -- do we have a microphone we are going to bring around? is someone going to bring it around or do we want people to go to the back? i will call on you.

if you could say who you are and we will let pat who has got her hand up there ask the first question. >> you said we have to get the moment. i'm wondering if you could give us any -- to questions -- concrete steps that could be taken to improve the relationship? he talks about the value of more visits by senior officials, more consultations. what are some other things that could be done? and another issue in washington relates to one of your neighbors. that is china, and there seems to be some concern and conversations that pakistan is getting closer to its friend,

china and particularly and the nuclear arena. i am wondering if you could address that concern? >> i will answer the second question first and then come to the first one. china and pakistan have been closed since 1949. the communists took over in beijing or goat was our understanding that since we are neighbors we could not afford not to recognize the people's republic. for the more our position was we didn't think that the republic of china sitting in taiwan at that time would actually be able to go back and take over the chinese mainland so therefore we recognize china. we became the first non-communist country to start direct flights to the people's republic and eventually, our judgment and our diplomacy with china facilitated your diplomacy with china. people tend to forget, again, history. henry kissinger went for his first trip to china through

pakistan pakistan facilitated the entire connection between china and the united states from 1969 when the first trip took place in 1974, when the united states recognized the people's republic of china and the shanghai communiqué came about. so, it is one of those washington things. something becomes a story. for example one candidate declares for six days everybody is talking about that candidate until something happens and then that candidate story fizzled out. that is the wages with china. china and pakistan have been friends for a very long time. they have the historic outlook and therefore they understand the value of consistency, so whether the military supplies are up or down etc. center the chinese have remain engaged with us and they will remain consistent friends and partners. therefore they have a slightly

higher popularity, significantly higher popularity in pakistan. they are seen as all weather friend compared with the americans who are seen as fickle friends and that is the different. we have never seen the u.s. and china pakistan relations with the u.s. or china is mutually exclusive. we do not see the u.s. and china as -- they are both two great countries. they have their own strength and we certainly don't think that china is interested in a cold cold war with the united states and no one in the united states has so far given us any hint that they look upon china as a major rival. this is not the cold war. china and pakistan will continue to remain friends. hopefully, our closeness to china will be -- and will be of use to us.

the steps that can improve the situation, i think that we need to understand that when events like osama bin laden take place, there are always two sides to the argument. the americans are upset osama bin laden was in pakistan and i fully understand that. i think we can both understand each others' perspectives and to forward. on intelligence relations, on military-to-military relations again i think those sites need to talk to each other directly. there've many things where we work things out. but when i read the morning paper, it seems things haven't been worked out. and an environment of agitation, when the pakistani media is

saying america is doing this and that, the american media saying pakistan. and the neo-politicians on both sides saying what is going on makes things difficult. ..

which the family mr. davis or the u.s. government reached an arrangement under our rules and he was set free but it would still be good if the americans i pulled up its part in if as to what happened because it is always the way it happens even with diplomats as i was to commit a crime in this country i would be immune but at the same time, i would also -- my government would be expected to at least investigate and asked me a few questions even if i am not allowed to be arrested or put into any sort of criminal judicial proceeding in this country. so, but from that point on, it's always been what i called diplomacy or not diplomacy that relationship by shouting at each other is not going to work. it's not working for either of us so let's let the professionals, secretary clinton is a great leader and has done a

wonderful job of with many countries in working out difficult situations. among your political leaders people like senator kerry who is the chairman of the senate foreign relations committee, he has often been very good at troubleshooting. the central intelligence agency is in the process of the leadership change, but vara too they are very professional and that is what their job is. out of the limelight and the department of defense the understand if there's one thing the u.s. military understands, it is the value of having relationships with other militaries in the world, and i think we should let those process these tests take place and bring the disciples and anger on both sides down and move forward. i think we can and i'm quite certain we will. >> yes, a question over there.

>> - kimberley and i am simply a curious citizen. i wonder although this may not be very diplomatic, whether using afghanistan is the equivalent of yugoslavia and has no coherence. >> actually afghanistan has been more or less a state in this present form for almost 700 years which doesn't make it comparable to yugoslavia at all. it's in fact there was an afghan state and kingdom going back quite a while in history. the problem of course is that we tend to sort gulf nations have different stages of modernization and the different stations of the evolution of political and other institutions

, and one of the -- when i was teaching here in this country in my years in exile, one of the things i used to do was i used to say to my students, i american students, don't think the world is divided between americans and want to be americans. there are people who just want to live their lives the way they want to live their lives and so don't always think afghanistan, what is afghanistan like wax it is sent. [laughter] and the second thing i used to tell the everyone is the other thing you have to understand is america is a nation of problem solvers. it looks for solutions. if this doesn't work let's invent a new moderate, find a better way, you know? too many side effects the pullout the drug from the market, etc.. but that is not the function of global diplomacy and international relations. the world is not a problem for america to solve. the world is a reality for

america to understand and live with. so some of things you have to live with and some things you can change, interact, and look, historically the americans have always succeeded in the nation's the contract with, not the nation's, not interacted with, without inserting myself into a domestic american argument and i have to be very cautious in saying that. but the difference between your inference on eastern europe with whom you interacted with, and north korea, iran and cuba, countries that you actually don't maintain diplomatic relations with and where were you more successful in terms of bringing your frog used and making people understand your perspective and even change their own conduct closer to yours, so i think afghanistan over time will have that introduction, etc., going with the agenda saying it is either or break up or sort of become

like, you know, if you can't be california, sort of at least the white arkansas. and going to happen. [laughter] >> yes? >> to kimberly's back-to-back. >> ambassador, bringing you from the philosophical back to the news of the day national counterterrorism advisor -- >> i was doing so well. >> i know, sorry. john brennan and filled the white house new counterterrorism strategy two years in the making. and he spoke with the relationship with pakistan and said she wished the pakistani people would be more honest with themselves about the fact a lot of the terrorism in the world emanates from their territory. that was set in the context of describing a strategy where he said there will be operations

such as the raid on osama bin laden compound again and the u.s. would take other similar actions, ie jones but he never said the word so how do you think that is currently on the streets of pakistan while you are talking about bringing the rhetoric down and would you think of the strategy? >> i haven't fully examined the strategy and any comment on that will involve consultation between my embassy in this, but as well so we will await comment on that. i think that we do feel we have made a significant contribution in fighting terrorism we are a victim of terrorism and at the same time we'll understand that there is an internal dialogue that has to take place in pakistan and it is taking place. it is taking place. if you read the pakistani press

every day both opinions, are there. there are those who blame it all on america and those who say this is not about america. this is about problems within our country. this is about a radical and extremist views within our society. there are those who say we have terrorist violence against minorities and that certainly has nothing to do with international political issues. so we need to wake up to that reality. the people who kill or religious minorities, christians, hindus and shia muslims. those people are also terrorists and linked to the same people engaged in anti-american violence across the border in afghanistan and certain similar violence inside pakistan. the same people who attack our army and intelligence services and government officials. so it is a dialogue that is

taking place in pakistan. we are quite confidence the united states and pakistan can work together, should work together. there's no need for unilateral action. in all honesty, what do you think would have happened if the president of the united states has called president zardari a few hours before and said we know where osama bin laden is? we would like our operatives and your operatives to go after him to gather. if there was concern about the information being linked, the american side could have said we aren't going to tell you where. we will just do it together and once we have arrived on the air base, your guys and ours can board the aircraft helicopter to together and do it together. there have been operations like that. khalid sheikh mohammed was found in pakistan.

all the others, the significant people, abu zubaydah, so many, in fact i would like to know how many of the current inhabitants of guantanamo who are arrested in countries other than afghanistan or pakistan with the help of pakistan intelligence services. so i think that sometimes we just go from one end of great allies and friends which is what the mantra was at one time in the previous administration to ghosh, of these guys suck, no good. this is not the way to do business. we wouldn't remarked as the latter. we understand them to be as a reflection of an american statement of policy and the americans have the right to defend their homeland by ensuring that terrorists are put up against the homeland are dealt with but as far as we are

concerned, we are very cognizant of our sovereignty. we would like to protect our sovereignty, and sovereignty requires when operations take place in pakistan they should take place with our knowledge and our participation. >> a quick follow what is that mean if there was a second rate that your forces would fire? >> when i became ambassador to the united states, i went and saw a very good colleague of mine, another professor of internationalism and i said i've been ambassador before, that was in a nice laid-back country called sri lanka so what is the one thing you think i should bear in mind while serving as ambassador having been in academia and this and that, and he said just remember one thing. i said what? he set never answer a question that begins with "if"? [laughter]

>> with a group in washington, d.c. i don't have a question to you, have a question through you for which you are hearing from your citizens back in pakistan. we have a presidential election coming up next year, and i can't believe nobody in your country is paying attention at all to it. i'm thinking about the republicans, some of them are saying they are spending way too much on stuff overseas you can take that money and spend it over here to help our country through this recession. i'm curious as to what you are hearing from your country about president obama's performance should he be reluctant -- reelected. are you hearing concerns, what are you hearing about next year's presidential election? >> i'm sure that i am hearing quite a lot, but again, ambassadors are never supposed to comment on the domestic politics of the host country. all-american embassadors followed that principal in other countries. laughter could all pakistan the

ambassadors to. as far as political rhetoric is concerned, let's be real this is not the first time it has happened of the american political history from the sort of isolationism has been a significant sort of intellectual strand and sometimes not even intellectual, just a political strand in america's history people think we are safe, we are okay. but in this era of globalization i think americans have to be very careful in increasing that. the american government spends far more on its military preparedness than on diplomacy. diplomacy is supposed to be the meaning and that includes assistance and foreign aid. diplomacy is the means to avoid the war so their something wrong when you spend more on preparing for the war, and very little on

actually avoiding the war, and i fifa there is a disconnect in this country where people say we are advocates of a strong defense but not advocates of a strong diplomacy and all tools of diplomacy so without getting into the american public believes the political arguments, if we have friends and the republic toward our democratic party, and they have people with this kind of you that we are spending too much overseas when a really you would spend much less overseas if instead of having to deal with people hating you and opposing you do actually have less people hating you and opposing you, and you could be the world's leaders without having to spend that much money because people looked worse you for your ideas.

i often tell my own personal story i was a young boy in pakistan growing up in the city of karachi. i used to go -- i was born in a family that couldn't afford air-conditioning. it was expensive in those days. i was a good student at school, scholarship kids, and i used to go to the american library because it was air-conditioned and have lots of books. and it was a great refuge. i read a lot of stuff and still have not met an american 17-year-old who has read the federalist papers. i have as a pakistani. and as a journalist the american after dinner the investor the time invited everybody to play a game that had just been introduced called a trivial pursuit, and guess who beat the american embassy diplomats at the game of trivial pursuit of american history? [laughter] after which the american best ever asked me how long i had

spent in the united states and i said i never visited the u.s.. my knowledge is essentially book knowledge. and of course, she decided to rectify that by giving me an invitation to come here as an under the u.s. state department officer program which i think was the best view of american taxpayers' money ever because you end up having somebody knowing your history, appreciate your idea without ever adopting your citizenship or applying for it, somebody who is from another country, loves his own country but looks at your country with admiration. he could have millions more like that at much less cost. i assure you my international visit and all the spending on the american library in karachi was much less than the price of the drones that we are having to use to take our terrorists there. so there's two ways of looking

at. one is spend more on defending yourself or spend a little bit also on avoiding antagonizing people and making them into enemies. [applause] >> they also spend a good deal of the gdp on the military in relation to how much it spends on its civilian infrastructure, and so i'm wondering as a pakistani american a relatively young one if you could contact with the u.s. and pakistan get the feeling they feel like the leadership has failed them and strengthening its civilian infrastructure. i was wondering if you could address -- >> pakistan has been ruled by

the military directly for more than half of its existence as an independent country so we have never really had an open debate on what our national priorities ought to be. national security is always important, protecting sovereignty is always important and ensuring that the country is safe from external enemies is always important that the same time it is also important to have a educated population strong infrastructure come investment in health care and the wherewithal for being part of the 21st century as a modern country. the leadership in the last three years has introduced some new things for the first time the defense budget is being debated in parliament and discussed in parliament. we are not there yet because we are still coming out of almost four decades of domination, four and a half decades of domination

by a politicized military which is different from the military. we all of our military and care about it because these are people who fight for us but at the same time we don't like them running our government. we don't like them taking over in the catawba since 1958 we have spent most of our life under the shadow of a politically interventionist military, and so we are coming out of it now. our military leadership has made it clear that it has no intention of rewarding that and it will allow us to have a more open debate and robust debate so the generation will have an opportunity to actually debate how much do we really need to spend on defense? who are our enemies, what is our defense strategy for how can we optimize our defense without allocating all of our resources on a supporting the military, how do we avoid the fate of the

soviet union which tried to match the united states weapons system and ended up having an internal collapse, and those are things our military leadership and civilian leaders are both aware of. people for debt in 2008 we had a transition. of weak transition from being under a general taking part in a military coup to an elected government. now look, the elected government has relatively less political experience. being in prison or being in exile listened and experience for running the government and there's restlessness because it is a young population especially the facebook twitter kids are just kind of going on and on and on about change tomorrow. change doesn't come tomorrow. when you are 54 coming you realize we have to go through what you went through from 24 to 54 to get there so you can learn

faster but the change will happen tomorrow, and so understanding the dynamics of pakistan's history and internal change is important before pakistan makes these changes. it's only a matter of time before we find the equilibrium between investing and our children's education and the population's health care our infrastructure needs, our investment in those things that will enable us to become a vibrant economy and at the same time maintaining the robust and healthy defense. but for that, we have to win the war against the terrorists first. >> can i just interject a question? has over the last three years of a civilian government almost three years, and as you said there has been -- there's been some with india, pakistan at the same time has increased its nuclear weapons capability in research perhaps more quickly than any other country in the world. why does the pakistani government see that as

necessary? >> pakistan's nuclear policy as you know has always been relatively simple. pakistan is part of global lefferts for non-proliferation. prime minister john he attended the the nuclear security and safety summit. we are willing to be part of any global effort to do with nuclear weapons. however, what we are not prepared for is having a much larger neighbor than ourselves, having nuclear weapons and not having a nuclear deterrent. that's been our policy. and so, our nuclear deterrent is primarily a regional specific nuclear deterrent, and even then, we have never felt close to the possibility of the future conversations and negotiations and dialogue which can find a solution and a way forward. we generally tend to be like all nations we tend to be secretive about the nuclear weapons and our actual warheads, etc.. and again, once we are in the

process of dialogue and the normalization with all of our neighbors, we feel more secure i think that is going to be less and less significant than it seems right now. >> yes, sir? and over there, thank you. >> thank you to mr. ambassador. it's been most interesting. i'm david klaus, a member of the rotary club of washington, d.c. and the movement worldwide has been trying to eradicate since 1985. last month i was at our annual convention which happened to be in america and gave all kind of data how we are closing on the eradication and pointing out their four countries, nigeria, india, pakistan and afghanistan, and for which this david in 2010 and he said it has decreased in

nigeria, india and afghanistan and in afghanistan the truth states will they bring in the kids to get vaccinated, but it increased from 67 to 144 from 2009 to 2010. he didn't give reasons or hypotheses why this might be so, but it seems to indicate there are parts of the country better just too restless or not under the controls of the vaccinations aren't happening. do you have insight on that? >> just to follow, those are the absolute numbers. 167. again, the size of the population has to be brought in mind and of the countries you mentioned, the fastest population growth is in pakistan so therefore we have more in france that requires the polio vaccination. we have a national program for polio eradication.

the prime minister benazir bhutto took over in 93 for the second term it was one of her first priorities and we actually brought it down. right now in the last four years or so the numbers spiked a little bit and they've been primarily in one area, and that has had to do with two things. one is certain cleric's taking the position that these vaccines or some kind of an instrument of the devil etc., etc.. and so some parents are refusing to register the children's birth to let them have it. you can't do anything about that. the other factor of course is security but we are trying to reach that as well. we have a national polio eradication program support it fully by mr. gates and his foundation. he saw our president here in washington, d.c. a few months ago and our president came from ambassador richard holbrooke's memorial service and we sat

together, and we may not be able to get to zero any time soon because still the parents refuse to get vaccinated there is nothing anybody can do about it if that comes across the circumstances that rise to polio but we do hope that we will be able to bring the numbers back down to the relatively nominal numbers we had in the mid-90s and the late nineties. >> let me take three -- >> we have that and do you have a question and then your question. go ahead. >> mr. investor, in your opening remarks i believe you said that half of the population of pakistan is under 18. there has been a fair amount of

coverage of these madrassas in pakistan where the koran is pretty much exclusively taught and there's a concern that radicalism is being sponsored in the teaching my question is how widespread among the boys of pakistan are these madrassas, who is supporting them and how concerned is the government about that? and my second question, if i may come in your opening remarks i believe you said that given that you're predominantly muslim country that there was some sympathy by the population with some of the aims of these

extremist groups. i can quote you exactly but i just wondered if you could elaborate on that. >> first all -- >> get the last questions. >> we answered them all together. don't worry. >> if i if to answer 1i will answer yours. [laughter] elizabeth from the new york times. i was going to ask a generic question about the pakistani intelligence service. are you 100% convinced that they are trustworthy and to have no links to insurgents. >> and we have one more. >> mr. ambassador, from the women's foreign policy group.

you have spoken about eight and my question also has to do with that. do you think that there is such a thing as too much at&t think it can harm the relationship between the two countries and can you speak on that in regards to the pakistan relation? >> so "the new york times" doesn't get mad at me i should answer il this a bit's question first. it is as trustworthy as any intelligence service in the world. [laughter] [applause] as far as the cooperation in the concern it's an ongoing cooperation that there are days one of them is upset with the other and others days when one of them is upset and days that they are both happy with one another. that is the nature of intelligence, and i do not need to say something new. i think that secretary gates as he was leaving office put it

that there are certain things that happen in the real world especially in the world of intelligence, which i think when we try to approach it with a very simple black-and-white sort of approach of the fall into the category and therefore we find them difficult. but it is in pakistan's interest to eliminate the terrorist groups and intelligence is to be part of all those efforts. the manner of doing it may not exactly conform to the expectations of some of our international partners and what comes first, second, etc., there will always be the disagreements in the nature. on aid on would say neither that it's one of those things people of different opinions. the purpose shall always be to get on their own feet and to be

able to do things on their own. if you create dependence which pakistan does not see, does not want and does not wish for itself, then you are not being helpful. at the same time, i would say that just as there can be too much aid there can also be too much debate. [laughter] and justice porter said about pornography that he doesn't know what the definition is, but he knew it when he saw it. similarly you can see and i think the real problem right now is in the sea in particular an entire profession and occupation has evolved which is debating asia, figuring out eight, thinking of new ways of providing aid, critiquing, criticizing, and they spend much

more money on producing the reports and actually manifesting and letting it happen. and anything that requires 97 studies about how to do it is definitely something that either needs to be revisited or be done in a different manner. you don't need 20 studies on how to build a school in afghanistan. you just need to build a school in afghanistan and the same goes for pakistan. so too much aid i'm sure there is a concept but frankly, you are young, don't join the ranks of the cynics in washington, d.c. crossing que know what, i'm going to make a career out of the beating eight of them doing it. whatever needs should be done as far as pakistan is concerned and i think devotee else in the world nobody wants to be a recipe and forever. as long as the germans receive aid after the second world war and look where germany is today,

japan. there are other countries, south korea considers countries that receive assistance, find their own economic momentum and the takeoff and others countries that in the cycle of receiving aid and not getting on their feet that's a distinction that needs to be made that enables people to get on their 2 feet and move on now there's a question from this end. and that related -- madrassas. well, first of all, the number of the students of pakistan and absolute terms may be several hundred thousand, but in the percentage terms it is less than 2% of all who maintain any kind of school. some in the others are radical in fact we have in the audience since i don't have their permission i am not going to because it might embarrass them who is already working on the radicalizing very successfully and there are programs of that

nature going on. if the icrd, the international center for religious diplomacy and they have an ongoing program, so to pakistan. there will always be conservative groups, religiously conservative groups in every society that will have a slightly different world view the and you and me on religion. what we should be concerned about is those who operationalize it into violence and terrorism. we don't mind people who want to have a more conservative interpretation of religion in their religious schools. who funds them? with the goals and objectives from all over the world particularly the gulf region. as far as the sympathy point i was making was there's been a nation the size of pakistan 180 million. even if 1% of the people have sympathy with the idea is not

necessarily of al qaeda but other groups that actually think that the object is is creating a caliphate again opposing modernity, throwing out western imperialism as we see it, reverting back to the more religiously based order, those people always be in a society like ours, and for that matter in the greater middle east as i keep reminding everybody our region is not going to be just another county in kansas any time soon. >> i think we've run out of time and i want to think all of you for coming and for all of your questions but i most of all went to thank the speaker, ambassador haqqani for your candor and generosity of the time that you've given us all for teaching a lot about how pakistan works and pakistani history and even some american history so thank you very much.

[applause] [inaudible conversations] [inaudible conversations]

earlier a senate judiciary subcommittee examined the work of the financial fraud enforcement task force, which was created by the obama administration in november, 2009. the task force is led by the justice department and includes officials from more than 25 federal agencies and 94 u.s. attorneys' offices, former prosecutor and minnesota senator amy klobuchar there on your screen. she chairs this hearing. it's one hour and 50 minutes. >> i am pleased to call a

hearing of the senate judiciary subcommittee on administrative oversight and the courts to order. good morning, everyone, thank you for being here. senator sessions said to go ahead, and we may be heading other senators join us leader in the morning. today we are going to focus on the oversight of the financial fraud enforcement task force, which is the largest coalition of federal, state and local partners ever assembled in this country's history to combat fraud. the issue is vital to the country as a whole and to individuals and families for a multitude of reasons. first of all mortgage fraud caused many americans to end up in the homes they couldn't afford which helped lead to the financial crisis and recession. we saw that in my home state of minnesota early on that that was the canary in the coal mine, people starting to get in trouble because they took mortgages out from people that did not have their best interest in mind.

the proliferation of internet scams has made many vulnerable citizens at risk of being swindled by false claims of easy money and cash prices. from government programs can undermine confidence and the diminished benefit of crucial public investments at a time where you have senior citizens who can barely afford the health care. the fault that there are storefronts set up people are receiving medicare checks they don't even deserve they don't qualify for can make anyone want to scream so the idea here is to cut back on that and do something about fraud and that is with the task force is about on medicare and medicaid has cost the nation billions of dollars, something we cannot afford given the fiscal situation we are in today. in the investment from we have seen with criminals like bernie madoff can do to the savings and finances of families, schools and charitable organizations and for all of these reasons it is

critical of order anti-fraud efforts be effective, efficient and comprehensive. as a former prosecutor rino this is no easy task. we must ensure we are providing adequate tools and resources to law enforcement and have the necessary laws and policies in place to detour this kind of fraud. we must have well-trained prosecutors and other government officials and we must promote the public awareness of the dangers of the financial fraud. finally, we need collaboration among law enforcement and regulatory agencies tall levels of government. it's always been my experience when i was the county attorney that if there was a major fraud committed the citizens didn't care who prosecuted what it was the local prosecutor's office or the state attorney general's office or the u.s. attorney's office they just wanted us to get the job done and the other things we've learned is they don't respect boundaries, they don't care if they're doing something in another country or another county or another state

so that's why combining the resources so that we are better able to tackle the crimes and to be a sophisticated as the crooks breaking the law so critical in the area of white collar crime and. president obama formed the financial fraud enforcement task force in late 2009. the task force includes more than 25 federal agencies, 94 u.s. attorneys' offices, the national association of attorneys general and the national district attorneys association. i think it's important local prosecutors be represented. so many crimes especially since 9/11 when the attorney's office understandably focused on many of these terrorism crimes, so many of the regular crimes including involving millions and millions of dollars or handle on the county level by the local prosecutors by the da offices, so they have to have a part of the task force and be a part of the task force. it seeks to harness the

capabilities of its member agencies and foster coordination in the fraud enforcement efforts. it's worth -- work covers a wide variety of fraudulent activities in the areas of mortgage lending, recovery act stimulus fund some securities, commodities and government procurement grants. the task force recently came out with its first year report and we will examine the report today. we will discuss the operations of the task force, howard has enhanced anti-fraud efforts of the department of justice and the steps that it has taken to increase coordination among the government agencies. and we have with us today to excellent representatives of the task force, todd jones the attorney from the great state of minnesota who sits on the steering committee of the task force, this is todd jones second round as u.s. attorney, so he brings a lot of experience to the job and to our state and second week of rob adkins, the executive structure of the task

force. i will give a more complete introduction of the witnesses before they testify, and then i would like to turn it over to cementer blumenthal if he would like to make opening remarks and i also see we've been joined by senator grassley of iowa and he has a few things to say as well. senator blumenthal? >> thank you madam chair and first of all for having this hearing and again demonstrating your leadership in the area of combating financial fraud and related issues that undermine the integrity as well as trust of the public our financial system. these crimes are more than just superficial passing in their impact. they are enduring because they go to the core of what people trust and need to have

confidence in. i want to begin by saying that i've reviewed the task force report which outlines increased prosecutions and convictions associated with mortgage fraud and related kinds of criminal the activity. those developments are very positive, and i really want to commend your efforts in this area. twice as many were charged in mortgage fraud cases in 2010 as in 2009 and twice as many convictions and roughly twice as many people sentenced at every level of criminal severity and that is very good news in the sending a message, a deterrent message about the severity and seriousness of the administration dealing with this kind of crime. the 533 defendants that were found guilty of mortgage fraud last year are its dramatic increase from the 235 the year before, but i think everyone

here, and i know both of you, being the very experienced and expert prosecutors agreed the scope of problem and the magnitude what remains to be done during a daunting and important what's here today to make sure the progress continues and that the public understands and difficulty of doing these cases that's the second point i want to make not only have we made progress but it is say amass the infrastructure and cooperation that's necessary to address the problems going forward. a lot of people don't seem to understand these are document intensive, resource demanding cases. they are not like the bank robbery is we used to do when i was the united states attorney in connecticut years ago which were simple cases. we move to white collar crime of

fraud which was more demanding and the kind of crimes that you are investigating and prosecuting our much more demanding and difficult to investigate and prosecute because you need not only dedicated skilled professionals which we have always had in the fbi and the attorney's office, but also individuals who are really school and trained in the kinds of investigation that need to be done so i want to thank you for your effort so far and say i look for to working with you cooperating and aiding you in minnesota where i know you are doing great work as the united states attorney in washington, d.c. and bringing together the resources we need to do not only on mortgage fraud but also the gasoline price spikes that we have seen and

crimes that may be related to them and as you know i've advocated even more action and look forward to working with you. thank you for being here today. >> thank you. senator grassley from the state of fallujah. >> thank you madam chair and i congratulate you on your leadership of this committee. it's a committee set when i chaired in the 1980's, so committee for i should say when i chaired in the 1980's we established a record but was able to help us get the false claims bill passed, and the bill as you know brought $20 billion back into the treasury and so i look forward -- >> those are big shoes to walk in, senator grassley to respect today's hearing provides the opportunity to fulfill the constitutional duty and i am continuing the basis to conduct oversight. it's also an opportunity to further address fraud against american tax payers on an issue that is not a partisan one has one that obviously a lot of us take very seriously.

most recently this committee held a hearing on fraud enforcement efforts of the justice department in january. unfortunately we've received responses to written questions last night after nearly five months after the questions were submitted while i'm glad the justice department was able to finally get answers and return to the committee it does a disservice to all members republican or democrat to get them after 5 p.m. the night before the next hearing on the same subject. notwithstanding the five month delay receiving those written answers to the questions, senator leahy and i joined by senator klobuchar introduced to protect taxpayers act in may and this provides a number of fixes to assist fraud and force the dow's well as providing additional resources to the justice department to combat fraud it provides these resources from fraud recovery without utilizing the taxpayer resources. the committee reported that the

bill had a strong the partisan vote and is now on the senate calendar. while our bill addresses important legislative changes to combat fraud important work remains. this hearing is part of that continued work. bye contacting the oversight we can insure the justice department is targeting for not aggressively on behalf of our taxpayers. this is especially important given the significance and you will government expenditures and programs like medicare and medicaid defense department procurement and not to mention increased expenditures the last few years including the president's trillion dollars stimulus spending, the bailout, the automobile industry bailout, the government conservatorship of fannie mae and freddie mac and the t.a.r.p. program. and the expenditures of taxpayers' dollars president obama cited executive order november, 2009 creating a financial fraud enforcement task force.

the task force is designed to strengthen the efforts of a department of justice to investigate and prosecute significant financial crimes and other violations relating to the current financial crisis and economic recovery effort. that's the end of a quote about the establishment of a task force. general holders stated the task force will wage an aggressive coordinated productive effort to investigate and prosecute financial crimes. he added again, not just hold accountable those who helped bring about the last financial meltdown but to prevent another meltdown from happening, end of quote. while i appreciate the attorney general comment on the task force, i want to know more about how the task forces operating whether it is achieving the goals of the president and ag and all too often here in washington task forces and commissions are created to make people think they are doing more than they actually are.

it's a way for public servants to tell the american people they are addressing a problem when nothing really changes. i want to hear from witnesses how the task force furthered the fight. for example in concerned the task force may be too broad. it's made of a steering committee by the deputy attorney general, vice chaired by the attorney general there's also a training committee been a separate victim's right committee and five separate working groups within the task force come each of the separate working groups has no less than three purchase of pitting agencies. it appears a lot of time and effort could be expanded coordinating all the task forces and working groups. this is a time could be spent investigating bringing prosecutions and i want to hear some specific examples of how this has added value and not simply facilitate more bureaucratic process combating fraud. i'm also concerned the task

force may be a press release collection agency utilized by the justice department to collect the samples of investigations and prosecutions that would otherwise have been brought. my staff has heard this specific accusation from agents and attorneys in the field, so i would like to learn a bit more about why the task force is necessary and how the taxpayers' dollars are utilized to facilitate the meeting and coordinating it has added to the fraga process. thank you, madame chair. >> thank you for a much, senator grassley. can the witnesses please stand to be sworn in? >> to you from the testimony you are about to give before the committee will be the truth, the whole truth and nothing but the truth, so help you god? >> i do. >> thank you. as i mentioned we are pleased to be joined today by first of all

todd jones the attorney for the state of minnesota. he also serves on the steering committee of the task force and chairs the attorney general's advisor recommitting of the u.s. attorneys. mr. jones served as attorney for minnesota from 1998 to 2001 and served on active duty with the united states marine corps from 1983 to 1989 and again in 1991 during operation desert storm. he graduated from mcalister college in 1979 and university of minnesota law school and to 1983. the account tda in minnesota when he worked extensively together you would be happy to know that todd jones and i went together wants to the white house might very first this it hasn't been on a tour before and to talk about the introduction as a crime bill and during the

speeches where president clinton spoke and i spoke i mentioned tawes jones and record a nation and i said mr. president, we work together so well we talk on the phone nearly every day, and so then the next day i got home and was a saturday and i got a phone call from todd jones. why are you calling me on the saturday? he said he told the president of the united states we talk nearly every day and i'm thinking seriously. so he is an honest man. next we have rob atkins, who has been the executive director of the task force since february, 2010. he became a federal prosecutor in 2001 and was named chief of the u.s. attorney's office in santa ana california in 2007. he's a recipient of the attorney general's award for exceptional service, the highest accommodation and the department of justice and was once named as one of the top 20 lawyers in california under the age of 40. he graduated from stanford

university and the georgetown university law center. mr. atkins, i'm understand your leaving that task force in july and by but like to thank you for door work. i know you've done a tremendous job in combating fraud and i want to make sure we think you for your service over the last year and a half as well as your time as a prosecutor. i look forward to hearing about your work in the task force. mr. jones, if you would like to begin. >> thank you madam chair, senator grassley, blumenthal, it is a privilege to be here with you today. as you all know, the financial crisis has impacted virtually every american across the country. the underlying purpose of the financial fraud enforcement task force is to address the crisis with a comprehensive response. senator klobuchar, you already talked about it and i know you'll understand the value of collaboration and as you mentioned 12 years ago when we worked together on a number of issues of mutual concern including fraud and when you for

the county attorney and i had the privilege of first serving as the united states attorney the importance of collaboration was always the forefront as we learned then and we know now different partners from law enforcement partners have different resources, different tools in their box, and of a goal for all of effective law enforcement is to bring everything we have collectively to bear on the issues at hand. that is what this multi agency task force is about. it is not in strict terms and operational traditional task force. we have task forces like that all across the country composed of agents and prosecutors working everyday making cases across the country. this task force operates at 30,000-foot level so to speak providing coordination and training, sharing information and expertise among all the partners who are all on the same side working toward the same goal. the president created a task

force as has been said in november, 2000 mind. it is composed of more than 25 federal agencies as well as state and local partners and it's one of the largest collections brought to bear in confronting fraud. it is chaired by the attorney general and includes the criminals of all divisions of the department of justice as well as all 94 united states attorney's offices. but this is not just a doj initiative. the task force includes just to name a few the department of treasury, hud, commerce, homeland security, numerous federal and inspectors general, the fdic, the ftc, the sec, the irs, special when specter general for t.a.r.p. and the recovery accountability and transparency board as well as numerous states attorney general the executive order direct us to use the full criminal and civil enforcement resources of all

these different agencies to do five things to investigate and prosecute, second, recover the criminal proceeds, if there, address discrimination in the lending and financial markets and forth, and hence coordination among federal, state and local authorities and last conduct training and outreach to the public. as chairman of the attorney-general of advisory committee i'm honored to serve on the committee along with representatives from the other agencies. however, the leadership of this group extends beyond the beltway for exit likely to the southern district of new york along with the criminal division representatives from the sec and cftc chaired the securities fraud working group. on the west coast of the mortgage fraud working group is cochaired by another one of my colleagues u.s. attorney general

bin ladens in dillinger california and he knows firsthand the impact of the mortgage crisis because his district has one of the highest rates in the country. to give you an idea of a multi agency approach of the task force he chairs the group with a present if from the civil division here in washington, d.c., the fbi, hud and the national association of attorneys general's. the task force also has developed a comprehensive network establishing financial fraud coordinators and every united states attorney's office. the task force has equipped this network with more tools and better trained personnel by compiling and distributing the guide of the financial databases and information as important, holding the training conferences, launching a website with fraud reporting and distributing information about emerging fraud trends. i know the value of having this kind of individual in the office because all of the civil and criminal listed u.s. attorneys

that were quickly can rely on the coordinator to wider than nationally that has never occurred before with all of the best practices to provide the government might not work that's got to the alphabet soup of the financial regulators at their disposal. many of those agencies my folks never worked with before. i see my time is running out i will pass it off to rot at kinsey and look forward to addressing the questions that you have. thank you. >> thank you. mr. adkins. >> good morning, chairman and distinguished members of the subcommittee is a privilege to appear before you today to talk about the financial fraud enforcement task force in the continuing fight to address fraud. i'm honored to appear before you today with todd jones, u.s. attorney from minnesota, who is a national leader of this effort on the task force and is also a national example for the fraud enforcement he does in his home district in minnesota.

as the u.s. attorney general described the task force has a broad membership and mandate to focus on the full array of financial fraud. that includes mortgage fraud on investment fraud, securities commodities fraud. it also includes those efforts that are designed to help the economy recover and those we seek to defraud those efforts around the country. as more fully detailed in the task force annual report which the chairman described, there are many ways in which the task force has been successful in the first year. i want to highlight a few of them and discuss more of them with you. as senator grassley noted the task force is very broad. that bread comes with challenges. but it also comes with strength. one of the great strength of the task force is training information sharing which is critical to unlocking the

strength from a large coalition. in pursuit of that the trend information sharing committee of the task force has been active in the first year and brought together financial fraud coordinators' including the one in todd jones district to a national training in october, 2010 bringing together a robust set of white collar professionals from around the country to discuss trends and how to move forward. the mortgage fraud working for this task of addressing mortgage fraud which senator blumenthal correctly noted is a broad array of fraud. from the loan origination to reverse mortgages to short sales schemes to the builder bailouts, loan modifications games and foreclosure rescue scams is a wide array of fraud addressed by that group. mortgage fraud trends show the fraud evolves in the cycle of the housing market and various by geographical regions. the proposal regional summits around the country and for some officials of the operational level.

i have seen in concrete ways of collaboration at the summits has led to better enforcement, for the civil come at the summit representatives and from the hud office of inspector general combined their data set in order to produce essentially a target list of individuals engaging potentially in fraud this serves a valuable purpose to those in the field with one of the great challenges they face in addressing mortgage fraud as it animistic feature delete the nature and in crude terms allows them to get the best bank for the buck in terms to where to focus the resources to address the problem in a targeted and efficient way. another area for the task force is the potential fraud, waste and abuse of the recovery act funds. because the task force was established in a time when the stimulus funds were still at the stage here being distributed much of the work of that group has focused on fraud prevention and detection. the closing of 2010, more than

100,000 professionals responsible for reporting and overseeing the disbursement as well as investigators, prosecutors and agents were trained as part of this effort we believe is one of the largest fraud prevention training efforts in history. the task force is similarly focused on efforts to combat fraud, waste and abuse with respect to the tar program. the engaged in successful efforts to partner the special inspector general of the t.a.r.p. program with u.s. attorneys offices around the country. and there's been good results in this area. sitar with other task force members brought cases including park avenue bank which it is one of -- which was the first conviction of an individual attempting to defraud the program of the $11 million. another working group of the task force focuses on securities commodities investment fraud and brings together a broad array of an oppressive subject matter experts as described by the u.s.

attorney jones. in the first year the group members conducted workshops on important issues such as the dodd-frank wall street reform and consumer protection act investigations and prosecution investment fraud schemes in parallel, criminal and civil proceedings. during 2010, the working group members investigated and prosecute members commodities fraud involving a large complex cases against executives for example, different task force members including the criminal division, u.s. attorney district of new york as well as sigtarp charged the chairman of the company for a fraud of more than $2.9 million that contributed to the failure of one of the 25 largest banks in the united states and was the largest privately held mortgage lending companies he was convicted of the trial all accounts in april, 2011, and is in fact scheduled to be sentenced this morning in the eastern district of virginia. last and definitely not least

and i see that i'm over my time the task force believes we cannot prosecute our way out of the crisis. public outrage, consumer financial literacy and assisting those to prevent themselves from being victimized is important. we have an online consumer based website, stopfraud.gov designed to do that. thank you. i look to any questions you may have. ..

the job of the task forces to get out all the information so they can do their jobs better and quicker. according to the first report, the number of workers tried prosecutions went up significantly in the task force thirstier. i know it hard to quantify the precise impact, but generally speaking, how is the assistance of the tax scores increase the number of prosecution? >> thank you, chairman. my background is also as a federal prosecutor and i while away prosecutions occurred at the line level throughout the country. in the u.s. attorneys offices and field offices of the fbi and elsewhere. you are correct that the task force is designed to help them. that's the motto, to support and that they bring, not as an overarching agency that would duplicate their efforts, but rather to help enable them through cooperation, information sharing, training in ordination.

the information sharing efforts in the training effort in the mortgage fraud arena are very important. i don't think you should look to the increase in mortgage fraud prosecutions to say those who directly cause he should never run by the task force because that's not a model. it is a matcher to see success, which is enforcement. you want to get out there, not just criminally, though that certain important because it serves the most viable deterrent you can have, but also with respect to other tools we can use. as he sought in the annual report, one of the great success stories at the task force has been bringing together some of these other entities that previously had not been escort needed were brought into the fight in mortgage fraud. i'm talking about state attorneys general, working very closely with u.s. bankruptcy trustee's, with the ftc, with the fbi and u.s. attorney's

offices and within the department of justice, not just promote justice, but their importance of enforcement can be brought, not to the exclusion of criminal cases, that's a compliment because we know we can criminally prosecute all these cases that need to bring every two we have two the toolbox. specific things the task was to stand into the targeted data compilation i described earlier, which is valuable to the field, we've taken that show on the road to those areas that are hardest hit around the country in mortgage fraud in order to interface with a 94 different mortgage fraud working groups and task worse is that the operational level so we can get data from d.c. sometimes it doesn't always get to the field directly in their hands to assist the prosecution. >> could you tell me about operation broken trust against private investors. >> operation broken trust was in december of 2010. one of the issues we were

hearing, for example come when finished a frontcourt knitters came together in october of last year was that airs an incorrect perception that investment schemes such as ponds these in the way, what we often refer to an answer you refer to as affinity fraud on a level of trust and relationship between victim in front of another person and correct perception that when the economic tide receded it left out those fish on the beach. by that name in office ponzi schemes unwound, such as made out america's schemes occurring today. that is incorrect. and we wanted to join focus to that of the most powerful way we could to get into the infinite potential of the dems, but even current victims who could report fraud. they are occurring and its increasing problem, people are potentially two publicly traded markets and other ways to invest money to ppm's another means. and so, we put together a snapshot, a window of three and

a half to four months to find how prevalent it was to get the message out. we found startling results. over 120,008 tons during that period. as part of the outreach, part of the effort to reach the public. as a set of male player marks, we can't just prosecute. we need the public's help. the mac is not specifically were prosecuted pilots for tax fraud, once you start doing that, i think of no other area quite like this and people see examples suddenly in the case of minnesota. millions and millions of dollars copied into the treasury because of a people that that might've been engaging in schemes we didn't have information on and they decided to pay out. i think it cannot not only prevention of the frat that can actually help fiscally better than any other area that i can think of when you show the examples are willing to go to bat and put people in jail. u.s. attorney john skurnick as you just talk about some examples from the frontline in

minnesota, some of the white-collar cases that have been particularly successful in how many millions of dollars they involved. >> senator, we've been very busy in the district of minnesota as a lot of my colleagues around the country have on the front friend. it is not always obvious. i tank to address senator grassley's concern about slapping a label in a press release and taking credit for work that really isn't related to the financial front enforcement task force is a misplaced notion. a lot of this work is in the pipeline. anyone that has been out in offices know that these cases are complicated. they take time. and so, we have a fully stoked by playing a fraud cases come in many of are generated by the increased focus in the collaboration and coordination going on right now as a result of the financial front enforcement task force effort. >> can you give me examples of

ones that have been finalized? people in jail? >> well, you know we have people in jaffna district to for most is tom patterson counties ceo of a corporation that is involved in a massive ponzi scheme, $3.5 billion ponzi scheme and within a period of 18 months, we went from an fbi, irs investigation into a full-blown trial to a sentencing in april of last year, where tom patterson received the largest front bench and better for 50 years and now is in the custody have thorough and that was all done in 18 months. more recently, to get to the point of this collaboration that's going on, trevor cook, another person involved in foreign exchange that we worked very close with the fcc and the cftc in part to the effort said this to not only criminally prosecute trevor cook and he

received a sentence of 25 years, but also to take civil recovery action for assets of the planet receiver and protect what we could recover for the victims of his stride. those are two examples from minnesota, but that has been replicated across the country. >> thank you very much. senator grassley. >> thank you, madam chairman. this task force has created november 2009. senator leahy and i wrote fraud enforcement recovery act 2009, signed into law may of 2009. the legislation increased the resources available to the justice department to combat criminal civil fraud, but also provided additional resource is to the fbi and sec, combating fraud was on congress' radar before the creation of the task

hours. given that, regardless of the existence of the task force, fred relating crane was being investigated and prosecuted. consequently, it is difficult to determine exactly what investigations and prosecutions are directly contributed build to the task force. for mr. atkins, i'd like to have your answer these questions and they are not accusatory. they're just trying to get some information. how does the task force determined what cases were investigated and prosecuted as a direct result of the task for his clerks and i'll have a couple other questions. >> thank you, senator grassley. i should tell you what i do want to thank you also as well as senator leahy and not talk about hopefully later about how directly the extension of financial institution definitions to nonbank one hours is a direct causal effect

between that and one of the policy proposals that fits into the task force policy committee has put out as a rule, which is to extend suspicious activity reporting, not just to financial institutions, but extended to the nonbanking lenders. your question is a good one. as i said before, my background in my personal view of the task force is that we need to support the field as well as the non-doj staff attorney said the sec and fbi agents. the way we determine which i very send press releases and announcements that we highlight to the task force is dependent upon the executive order, which we filtered into different working groups. you mentioned earlier correctly that there can be bureaucracy involved in such a broad effort. working groups are designed to address that, put in place subject matter experts at the point of despair in this focused areas. so mortgage-backed securities and commodities fraud, recovery

and fried cautious chasing it relates to procurement and grants fraud in the recovery act area. tariq fraud largely worked basic tart and certain nondiscrimination cases. those are the areas taskforces prioritize to the executive order in areas we coordinate with financial fraud coordinators in the city are the areas we highlight and push out to get the maximum deterrent value. >> if you can answer this question, how often do the different working groups at the task force meet? >> that is hard to answer. it depends on the working group. for some of them like the securities and commodities fraud working group, which is shared by pre-burner and the southern district of new york, the enforcement with the sec, david meister, director of enforcement at the cftc as well as lanny brewer, you know about each of them post-meanings in a rotating basis in the last one was hosted by the chief in new york a couple weeks ago.

that group, because of its size. as he noted, we didn't start prosecuting in november 2009. as a group that's working together for some time. they meet regularly, typically two to three months, but they also have individuals who are at a lower level within the organizations that interface with on a weekly basis offline. outside of the more for my skirts. i find that the very productive. other groups the batch file regularly. the mortgage fraud working group would have meanings but almost those summits around the country. subgroups of would get together on particular issues. some meet and a more regular basis every few. others need much more frequently. >> we have to press releases that i've referred to. we have an e-mail report that i characterize as the separation -- the summarization of press releases. what other official word

products are derived from the activities of the task force and the various working groups? >> we put together through the information training and information at compilation of the different fraud databases. this surprisingly had not been done previously. amongst the alphabet soup of the federal enforcement family, there exist many types of data sets that we put together resource guide and gutted out to the field to the financial fraud coordinators, allowing those getting around a bureaucratic response, where they conform to his family is necessary to get access to help with what they do. there are other things that the u.s.a. bulletin that goes out to all u.s. attorneys around the country. we've put forth actually two separate u.s.a. bulletin that go

out as a resource and training guide for the field, describing ways in which two can rent particular difficult problems, including mortgage fraud in some of the others they know we discussed. >> via the series of questions. i will get to all of them, but i'd like to get a handle on budget and financial control of. according to written testimony in the task force annual report, the mortgage fraud working group has held regional summits around the country, including miami, detroit, phoenix cummock columbus, fresno, los angeles. are there tessera discusses training and the agents at the national advocacy center. testimony also describe training material. despite all these deliverables in the travel acquired -- required for these meetings come in. in a report for your testimonies are discussion of a budget and accountability of tax dollars

expended to fulfill the task force functions. i can earn by not have any formal budget expenditures for travel could be unnecessarily high. question company executive order creating a task worth states that a private shall provide funding for the task were subject to availability of appropriations. is there a separate budget at the justice department for activities of the task force? and if there isn't, why not? >> i joke that there is a separate budget and i think the reason is the task force model. the task force said it would be ill served if it attempted to essentially put in place and i know not suggest the myth, and each of the structure structure that's duplicative if efforts that are already ongoing. the task force model is one in which we enable those who already are the experts. they now to prosecute cases, regulate certain markets. but to put them in places and

frankly co-opt some of the other side around going so we can take one part of the federal family and put it and touch another. grab folks at the state level and bring them so they can work together. you mentioned the national advocacy center, originally planned with national advocacy training that would occur anyway. what we did was make them better in our view. we prided neil brodsky, special inspector general for the t.a.r.p. program to see a broader array of fraud resources that they can use in their everyday lives out in the field. that is the model, not so much to always create, produce resources and dedicated individuals whenever said the effort so we can better use of funding that does exist among the federal and state families. >> all follow-up with some questions later on. i'll stop for now. >> thank you rematch, senator

grassley. senator blumenthal. >> thank you, madam chairman. as some questions focused on gasoline prices in the commodities market that are related to feel and soon heating oil, which even though now it's pretty warm out i will be a pressing topic produced soon. as you know, the national averages close to $4 a gallon. to be specific, i think it's about $3.54 a gallon in connecticut and $3.92 a gallon, which is way higher than it has been. in my view, transducing lately in the markets cannot be explained solely by supply and demand in the creep down the most prices after some developments and actions by the administration and other law enforcement i think substantiate

my view that speculation and possibly illegal manipulation of the market is to blame at least to some extent. and i welcome and applauded the decision to create the oil and gas price fraud working group within your task force. i applauded and commended the federal trade commission in initiating an investigation, wide ranging fraud and manipulation than to gas price at every level of the industry. and so far, i note with some regret the department of justice has not announced any such investigation. so my question is, can you tell us whether the department of justice has initiated any act of civil or criminal fraud investigation into potentially illegal, speculative at cavite

in the futures markets or any other markets related to feel? >> yes, thank you. oil and gas price working group was established some months ago has noted in the title that focuses on fraud is not an energy policy or anything like that. as you know, fight together different partners like the ftc's company cftc can the states attorneys general, this very same types of relationships which are accused ourselves better at fraud enforcement. i'll admit the oil and gas price fraud is not a big part of my personal background as a prosecutor and has been a learning experience for me as well, which is a good thing. the ftc is my understanding that i've seen the announcement about their investigation into potential anticompetitive or manipulative conduct in the wholesale oil area. the department of genome does not announce investigation if

there are any. we aren't in a position now to announce that their any investigation. we typically speak when recharger at. different agencies have different standards and how they address that. i can tell you that the department is fully engaged in that effort. different components including the antitrust division is fully engaged and i think we play a valuable role, especially in terms of the interface between the federal family and the state attorneys general who has reflects both are in this area. >> well, let me just suggest that the rule as i understand it is that the department of justice doesn't announce investigations, but sometimes the antitrust division makes donuts interested in facts sometimes makes known its investigation. and a very powerful effect of

the announced action so far in bringing down his intended in the speculators that they are on the wrong side of history, on the wrong side of the market, on the wrong side of the bed are making is a benefit to the public. and in fact, what we've seen as mark kelton and the commodities trading commission has said speculation is that an all-time high. speculative positions are 64% higher as june of 2008. all of the anti-shia are there to indicate that investigation by the antitrust division for sound part of the department of justice is certainly appropriate and necessary here. and i understand that as attorney general jones, u.s. attorney jones said, your task force is looking at this area

from 20,000 or 30,000-foot levels. but you certainly have the authority and in my view responsibility to drive this investigation at the one foot level in the department of justice, which is where they should be trading. >> and i appreciate that. i think i could repeat what the attorney general has said in this area, which is we are very aware. we are looking into it. we've got all those components in agencies and regulators together so we can look at this issue to pursue any fraud if it occurs and while we understand there can be legitimate rocket forces for change prices of gas or any other commodity, it's an area of concern we want to make sure we do a weekend. it's good government to bring folks together to focus on exactly the issue raised. >> what is the position of the task force on whether there should be position limit? at a doctor familiar with that

issue in the commodities future trading corp. area, but obviously positions would help diminish the power of speculators to corner the supply in certain areas. and i believe strongly we should have those limits as soon as possible. >> i would have to defer to my sophisticated colleagues at the e-mail server and position limits. as i said before, we prosecuted five cases, this is a learning experience for me as well. >> i would like to suggest and requests from the task force that give us a position on whether there should be position limits and when other measures and steps the commodity futures trading corp. should take. i believe it is part of your task force, is that not? >> correct. and the part of a working group. >> i would respect and requested the task force provide on that

issue. >> i appreciate your interest in this area. >> thank you very much. thank you both for your very good were. >> senator grassley. >> thank you, madam chairman. thank you for letting me go around. i'd like to continue to do, mr. atkins. you've answered the first question as best you could because of the purpose of the task force. it does not have a budget then, so let's move onto the next question. from a specific account or appropriated funds drawn and utilized to fund activities for the task force? >> i don't know the answer to that question. either the doj with respect to the 25 other -- >> let's leave it that you have said that in writing. >> very well, thank you.

>> is official travel up the rest for any of these meetings? and if so, is there a separate budget to travel? >> i believe official travel is authorized. the reason i couldn't say for sure that you've got got components within doj, for example. the antitrust division, civil rights division, criminal division from executive office of u.s. attorneys, 94 u.s. attorneys offices. i don't know exactly how each of them within doj handle it. they do it through official travel because it is oftentimes so we try to do is use like i said before, existing facilities. we will try to use resources and dedicated personnel or people are ready in the region to represent us at those types of events. there is of course official travel and costa says he is for. oftentimes it is an in replacement for their efforts that we're going to be had, but not such a broad collective level, where we are really

bringing together individuals who may try to strike at a narrowed to do these efforts in a comprehensive way with a bigger target audience in a better way of pushing out to the field. >> you know what i think i'll do is we might have noninformation for three further questions. i think i'll turn this into in the u.s. is in writing. if i could go to mr. jones. president obama is stimulus program had a lot of taxpayers money into various projects and programs across the country. the recovery accountability and transparency board was part of the law to see out the funds were spent and that they were not subject to fraud, waste and abuse. the recovery board and inspector

general sutherland examples of peace and contractors abusing dollars. for example, there is a significant prod with their weatherization program for an audit found shoddy work and widespread fraud. why, my question to you, why is the recovery act working group necessary, given existence of the recovery accountability and transparency word, which is made up above the inspector generals of each agency awarded to recovery act funds? >> well, keeping the consistency of the model, the recovery act working group is focused primarily to date on training for state, local and federal folks that are granted administrators. nearly 400 agents and editors have been done after a training program to the information sharing to investigate this for

a period as rob said earlier, the grant and procurement fraud is something we would do and be engaged in any way. i think with the working group does, assess the financial fraud enforcement task force, it allows us to leverage resources in a more focused way. and it will shift over time. we fully expect the recovery act training that investigators and auditors that will be of use for temple in alabama as they start to get resources to rebuild after the tragedy there but the tornadoes in any place else. fema funds for their federal dollars gone into an area. this training must forever and they will live beyond the financial fraud enforcement task was distance. >> mr. jones, my last question will start with a first report from the task force, the establishment of the working groups last year added the full weight of law enforcement

community behind the recovery board's efforts. as the u.s. attorney out there in the field, working very much on the front lines to prosecute fraud, regardless of the existence of recovery act working group, with the full weight of law enforcement already be behind investigating goals to commit recovery act and related fraud. and if not, why not? >> well, where we are in minnesota, we have been keeping an eye and peered the one thing from a practical standpoint that the financial fraud enforcement task forces that it's really enhance communication between our offices in the i.e. cheese and between aig and the fbi. ..

that the task force shouldn't have a budget but i wonder if it wouldn't be worth -- i guess i would like to ask if you would commit to putting together a budget for all the activities in the task force including specific budget line items for conferences and training materials. wouldn't that be useful if you wouldn't want to do that why

wouldn't that be a good thing to do? >> that is an interesting question and one which i think we would be happy to explore with you. i think any way we can prove what we do on the task force is something we should increase. there could be some difficulty with it once you get outside of the department of justice. most of my time is spent with three relationships, slightly more than 50% of the time with the office of the federal agencies and state level and it does become difficult because so of the other task forces like the enron and the others this is different. it's so much broader. that tracking is problematic for the task force writ large but i'd be happy to explore that question if it's something that can improve the work we do and be more efficient. >> thank you, madame chair. >> thank you, senator grassley. overall, mr. adkins, how would you describe the level of fraud

that seems to have occurred i think senator grassley was talking about it with respect to the recovery act funds, and where do you see the level is it as much as people anticipate given how much money is at stake? >> it's always hard to know in , but certainly there has been hundreds of millions of dollars in the recovery act on this that have gone out and in my view the level for what is very low in relation to that has to say there won't be any, but i think that great credit is deserving for the recovery accountability transparency board as the chairman detainee but also for the ayachi around the country but training effort that's taken place you never can say whether a fraud would have occurred but for the training. it's hard to measure but i believe it has a great affect and i believe that that working group has brought in -- there was a four year effort you're

probably familiar, the national procurement fraud task force the was recently brought into the recovery fraud working group. that was done because there was duplication and the just great leadership at the oig level we want to bring to bear so we are pleased to address the fraud if and when it occurs probably more importantly to the american public from happening in the first place. >> mr. jones, as we look at the potential legislation senator grassley mentioned the bill we have to try to get more resources to refines redirected into the white collar fraud area. can you think of any legislation will be held formally to the task force that you and your efforts to prosecute white-collar crimes and fraud crimes? >> well, some measure, as you know, the department has legislative affairs and the criminal division has routine

contact with your staff and the committee and we have on occasion seem proposals for legislative fixes nothing particular comes to mind particularly the things a result of the supreme court cases but i know there's a package in the proposed legislation that the criminal division has worked on with your staff and nothing in particular comes to mind and i'm not going to get myself in trouble by suggesting something. >> i'm sure we would have some ideas. [laughter] thinking about when you were the u.s. attorney, george first, what was that again? 98 to 2001. >> what do you see is the difference now ten years later in the type of white collar crimes we are seeing around the country and the approach that our government is taking to those crimes? >> three things, senator. it's like to groundhog's day to

the evolution of the fbi has been absolutely amazing continues to be an intelligence based law enforcement agency and at the same time they've got enhancement on their ability to detect fraud, sort of physical level the things they've done on the national security front they also lost capacity because a substantial core of the bureau which a lot of districts around the country which is a man parked on fraud investigation is somewhat diminished because the resource initio but that's allowed us to do some things with the irs and the ig and look at civil enforcement on the fraud front. >> part of it is understandably after 9/11 a lot of the focus remember their numbers were put on working some of the terrorism issues and so there's probably contributed to some of the change as well. >> the two other things i have seen is the volume of information, the volume of

information that's out there because of the technology and the use of the internet as a platform to commit fraud and communicate over the last ten years. the internet was emerging as a criminal platform but it's much more enhanced now and it creates a lot of challenges with of the detecting fraud, with identity theft and with anonymity for criminals globally to track down individuals that are accountable per perpetrating fraud and that is a challenge we are trying our best to address. >> very good. and in terms of work and the department of justice there's a task force and others for coordinating has that been enhanced? >> in my personal opinion and has because the corporate fraud task force ten years ago post in rot that was kind of a doj driven lots of boxes, the top of

the church people sitting around a table and talking great thoughts and great plans, but this is very much one because it's such a collection of 25 federal agencies and because it includes a lot of outside of the department of justice agency, the ing and the auditors and the folks that are actually going to generate cases i think makes this one gives it some sustainability because it is up devotee emerging trends like oil and gas, and it also allows us to have some continuity left with operators. it's been probably the biggest benefit that i have seen from a u.s. attorney's office perspective is the information sharing that goes on a lonely are we doing cases in our district, we are also now sharing the lessons, modes of operation, individuals,

nationally through the financial fraud coordinator network for the investigation and prosecution and best practices in the crux and maybe, just maybe cut some things off before the merger into a crisis level criminal-justice issue. >> i appreciate that. i've never taken you from someone in your marines and as a prosecutor wanting to just sit around and speaking great faults also in girl blood you do, mr. jones. >> thank you, senator petraeus too cementer blumenthal, you have additional questions? >> a couple of quick questions, and thank you, mr. jones for your service in the marine corps as a prosecutor in the department of justice focusing again on the mortgage foreclosure issue. i wonder if he can tell us,

neither to the to either mr. etkin or mr. jones whether the signing practices that were uncovered some months, 80 a year ago or more have given rise to any criminal investigations and prosecutions. >> you're correct i think it came to light in late september and increasingly into october of last year. what is commonly referred to as the signing also there's more to it than just that in the foreclosure documentation issues. as you know, the task force i think this is a benefit as the u.s. attorney jones said there are certain things that will outlive the taskforce. one that i'm most proud of and i think is necessary to affect enforcement of the national level is great synergy between states and federal law enforcement authorities. in my experience it is not something we've always done as well as we could have and that's

been a primary focus. because of that relationship building that had already taken place as part of the task force it had a good platform to address this crisis because so much of what is involved in that area is a state issue, but there's also a federal issue with hud and the ftc and the department, and so a working group that has been put together that is focused on it, we won't discuss potential actions or investigations, but they are very focused on it. there's been discussions of negotiations with certain financial institution loan servicers and the possible to see with the result of that will be but certainly is a focus, certainly the department is committed to looking into it. in my estimation at least i think critical to such an asset

to the cadet success is the to the federal and state parties. >> i'm aware of as we all are the negotiations i am not aware of by any department of justice investigations concerning of a criminal charges the state attorneys general are apparently investigating and perhaps negotiating possible resolution of the civil claims but is there any consideration to potential criminal charges? >> as i think has been stated publicly already the department is committed to looking into this issue and being aggressive and pursuing it. we can't confirm criminal investigations if there are any. the states have flexible authorities in this area, and as you know, some have criminal authorities and some don't. some have broad authorities and there's different ways foreclosures to different states and that is an important element

of what we do. while i can't confirm the existence of the criminal investigation, we are certainly focused on at and we certainly are interested in continuing to pursue this matter with all the resources that we do have. >> did you have anything to add? >> we have to tread lightly because of the parameters which are operating with on the investigations, but i do think would be fair to say that a member of my colleagues are very alert to the possibilities that some of the activities might rise to the level of criminal investigations and potentially prosecution's, and that is dispersed throughout the 94 u.s. attorneys' offices and, you know, there's certain geographic areas of the country where there is a higher likelihood something could evolve into a prosecution,

and then there are areas they are not. is that cryptic enough, senator? [laughter] >> you are understandably correct. appropriately people are paying attention to the possibilities, and the only point i would make is that someone who signs a full seven david is going to be submitted to the court is the provisions would be in violation of the federal law and i would hope would be under investigation by the group of justice, and again i want to thank you both for your helpful and informative testimony today in your work in this area. thank you. >> thank you. what to think both of you were testifying at senator blumenthal and senator grassley for being here sticking to the hearing and asking good questions. i know senator leahy would like to submit his statement which i will do, and i want to thank senator leahy for his leadership

and senator sessions and his leadership in this area of financial fraud. we will leave the record for the hearing opened for two weeks, and i just want to thank -- one week, one week we are getting efficient and the senator. we will keep the hearing of the record open for one weekend i want to thank both of the witnesses four-door work and your excellent testimony today. thank you. the hearing is adjourned.

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federal prisoners locked up for offenses involving crack cocaine will be eligible for early release after the u.s. sentencing commission agreed to make retroactive changes in sentencing guidelines. there's been disparities in punishment for crack and powder cocaine crimes. last year congress passed law lowering recommended sentences for people convicted of crack cocaine crimes. but law did not automatically apply to offenders already in prison. the vote by the commission earlier was unanimous. >> -- public meeting it. is there a motion to do so? >> is there a second? >> second. >> any discussion? >> now we need a vote on the motions. all in favor say aye. opposed? the motion is carried. now, we move on to the matter

before the commission today. so good afternoon to everyone and thank you all for coming to this important meeting regarding crackle retroactivity. today's public meetlled to voteo apply retroactively the commission's proposed permanent amendment implementing a the thir sentencing act of 2010. let me begin with the statute. by statute, the commission is required to review and revise the operation of the sentencing guidelines and ensure their conformance with federal statute. by statute, the commission also is required to consider applying retroactively changes to the guideline that lower penalties. because of the importance of the finality of judgment and the burden placed on the judicial system with a change to the guideline is applied

retroactively, the commission takes this duty very seriously and does not come to a decision on retroactivity lightly. you will hear more extensively from me and from my colleagues about the liberty of process that the commission followed leading to today's vote. but before the motion, regarding retroactivity has raised, i want to make some comments on today's proceedings and the process that will follow. first, i want to make it clear that we are voting today on their retroactivity of the guidelines only. the commission cannot make a fair sentencing act itself retroactive, therefore if there is an affirmative vote not every federal crack defendant in custody would see a benefit from retroactivity because the whole statutory mandatory minimum will

still apply. second, if the commission decides to give retroactive effect to the sentencing amendment today, it does not become effective immediately. but it becomes effective on the date set by the commission provided that the amendment itself is not been disapproved by congress. that effective date is november 1st, 2011. consideration by the court of the retroactive to the motions would not be proper before such time. answered, if there were in the affirmative vote on retroactivity that does not mean the defendants are free to leave prison immediately nor does an affirmative vote on retroactivity if there is one mean the end of the process. every defendant who believes he is eligible for letcher activity must have his case considered by a federal judge who will

ultimately decide to what extent if any a modification of sentence is warranted. the decision will be directed by the statutory limitations on sentence modification proceedings, the policy statement covering a retroactivity and the court's analysis of the statutory factors. let me emphasize the federal judges would be required to consider the defendant's risk to public safety as part of their overall consideration of the defendants' motion for the reduced sentence to read today is a very important historic date for the commission and national sentence policy as a whole. the commission has long worked on this issue. i had a free but together all the reports before the reports we've written on the subject 1995, 1997, 2002 and 2007. we spent the last month since

the hearing reading letters of fighting over 43,500 the testimony and reviewing the issues raised by the supreme court's appellate and district case will. our excellent stuff has literally been working across and the commission is grateful to everyone probably all of you sitting in this room who sent them letters or testified regardless of what you're position was on the issue because we want to hear from everyone when we make these important decisions. your views help us make better decisions. there's much more to do and we look forward to working with all of you on the issues before us as i said, my colleagues and i will have more remarks so now i would like to get the meeting started with our general counsel and the first order of business. >> thank you before you hit the proposed amendment that a land as 1.10 which is the policy

statement governing the retroactivity and for ways, first to propose an amendment would expand the listing and section 1b1.106 subsection c to include part ag and see of the amendment 750 as amendment that need to be considered for the retroactive application. in response to the sentencing act of 2010, part eight of the mendicant 750 amended the table for crack cocaine and a related revisions to application node. part seeley to the the cross reference in section 2d1.1 be under which an offender who possessed more than 5 grams of crack cocaine was sentenced under to d11. the amendment proposes 1.10 to change the limitations apply in cases in which the imprisonment was less than the minimum of the applicable range at the sentencing. under the proposed amendment of the general limitation and the subsection continues to be that

the court will not reduce the term of imprisonment to the less than minimum guideline range. the amendment restricts the exception of the subsection to the cases involving the government to reflect the defendants substantial authorities. for those cases the reduction in the guideline range may be appropriate. third, the proposed amendment amends the commentary to 1.1 to address the application issue circuits have conflicting interpretations about when is out all the court applies the departure profession before determining the applicable guideline range for purposes of 1.10. consistent in the three step approach adopted by a mendicant 741, reflected in 1.1 the proposed amendment clarified the applicable guideline range referred to in 1.10 was the guideline range determined pursuant to 1.8 subsection eight which is determined before consideration of any departure and the guidelines renewal for

any variant. for the amendment s application to 1.10 to specify that consistent with subsection eight the court shall use the version of 1b1.10 that's an effect on the gate in which the court reduces the term of imprisonment as provided by 183582 c2. finally the amendment adds commentary to 1.10 to reverse the supreme court case dealing with the u.s.. a motion to promulgate proposed amendment would be in order with an effective date of november 1, 2011 which is the same effective date as the underlying amendment 750 and granting tactical amendment authority. >> thank you. is there a motion? is there a second? >> second. >> is there a discussion on the motion? five alaska this point the staff director to call the roll. >> as described by the general

counsel fisa. [roll call] the motion passes unanimously. >> at this point does any commissioner want to make a statement? commissioner jackson. >> in the sentencing reform act of 1984, congress not only created the united states sentencing commission, it also required the commission to consider retroactive application of guidelines penalty reductions title 28, section 994 of the united states code is not ambiguous. it states if the commission reduces the term of imprisonment recommended in the guidelines applicable to a particular

offense or category of offenses, it shall specify in what circumstances and by what amount the sentence of prisoners serving terms of imprisonment for the offense may be reduced to read there is a similar degree of defender to defendant in the fair sentencing act of 2010. in that statute, congress reduced the statutory mandatory minimum penalty threshold applicable to federal crack cocaine offenses among other things and rather than permit the commission to consider whether or not to make the corresponding guideline penalty reductions in the ordinary course of its amendment cycle congress ordered the commission to make conforming penalty reductions in the guidelines that pertain to crack cocaine, quote, as soon as practicable. we are here today because the commission did just that. it has fulfilled its statutory

duty under the fair sentencing act to reduce the term of imprisonment recommended in the guidelines applicable to crack cocaine offenses and it now must consider whether those guidelines changes should be eligible for retroactive application of the sentencing reform act. congressional silence about retroactivity in the after sentencing act tells us nothing about whether the commission is relieved of its statutory obligation to consider the retroactivity of the corresponding guide line of penalty changes. congress certainly could have addressed that issue, but they did not. so now the commission must do with the sentencing reform act requires. i share the conclusion of my colleagues as many of you here today that part a and c of the guideline amendment 750 should be subject to retroactive application. this conclusion rst